Toxic Mold Allegation Unable to Expand Workers’ Comp Intentional Wrong Exception

November 7, 2019Articles New Jersey Law Journal

Since 1911, the New Jersey Workers’ Compensation Act (“the Act”) has provided employers and employees predictability in resolving disputes over injuries occurring in the workplace. Indeed, our courts have routinely dismissed creative attempts by plaintiffs to circumvent the Act’s exclusivity bar by arguing that their injuries are due to the intentional wrongs of their employers and that they should be entitled to bring their claims in New Jersey Superior Court where they can seek unlimited damages.

Most recently, in Margaret Allen v. MB Mutual Holding Company d/b/a Manasquan Bank, et al.,2019 WL 2395913 (N.J. Super. Ct. App. Div. June 6, 2019) (“Manasquan Bank”), our Appellate Division reaffirmed that courts are unwilling to water down the Act’s exclusivity bar even in the face of an allegation that a worker was sickened by toxic mold in her workplace. The Appellate Division upheld the dismissal of a lawsuit that alleged Manasquan Bank committed an intentional wrong by failing to properly remediate toxic mold thereby causing plaintiff, a branch manager, to contract various mold-related illnesses. In upholding the dismissal of the lawsuit, the Appellate Division reinforced the supremacy of the Workers’ Compensation Act as the preferred mechanism for addressing workplace injuries including those caused by environmental substances such as mold.

NJ’s Act: A Historic Trade Off

Prior to the early twentieth century, in New Jersey, an injured employee’s only resort for a workplace injury was to bring a tort claim against the employee’s employer. Such claims, while carrying potentially high payouts, required time and resources to bring, and were rarely successful. Additionally, defending these claims proved excessively time consuming and costly to employers. To address these issues, the New Jersey legislature developed a compromise between employers and employees resulting in an “historic trade off.” Mabee v. Borden, 316 N.J. Super. 218, 226–27 (App. Div. 1998) (citing Millison v. E.I. du Pont de Nemours & Co.,101 N.J. 161, 177 (1985)). Under the Act’s exclusivity provision, injured employees relinquished their rights to bring tort claims in court against their employers in exchange for a swift resolution of claims with limited compensation.

The ‘Intentional Wrong’ Exception

However, the legislature also recognized that the exclusive remedy provisions of the Act should not apply in every circumstance, such as where the employer intentionally engaged in misconduct that resulted in an employee being injured. When such “intentional wrongs” occur, the legislature determined that traditional judicial recourse is still the best venue for addressing such claims. N.J.S.A. §34:15-8. Millison, 101 N.J.at 178-79.

To constitute an “intentional wrong”, an employer’s conduct has to “break the mold” and rise above the level of a knowing, willful, and unlawful act. An employer’s actions have rarely been found to be sufficiently flagrant to trigger the narrow intentional wrong exception to the exclusivity bar. In the seminal case, Millison v. E.I. du Pont de Nemours & Co, the New Jersey Supreme Court established a two-prong test to determine whether a plaintiff has properly alleged an intentional wrong. First, the plaintiff must establish that the employer engaged in conduct that it knew was “substantially certain” to result in the employee’s death or injury. Laidlow v. Hariton Mach. Co., 170 N.J. 602, 613 (2002). Second, the plaintiff must demonstrate that the injury—including the circumstances that led to the injury—was (a) “more than a fact of life of industrial employment”; and (b) “plainly beyond anything the Legislature intended the Worker’s Compensation Act to immunize.” Id. at 617. This test is designed to measure “not the degree of gravity or depravity of the employer’s conduct, but rather the narrow issue of intentional versus accidental quality of the precise event producing injury.”  Millson, 101 N.J. at 171 (citations omitted).

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In Millison, employees (or their spouses) filed a claim against DuPont after they developed mesothelioma, a deadly form of cancer caused by the inhalation of asbestos fibers. There, the court found that DuPont had compounded the worker’s injuries by instructing its medical staff to conceal the worker’s medical conditions thereby preventing them from leaving the workforce, continuing their exposure to the hazardous substance, and delaying their treatment. Id. at 182–83. “Such intentionally deceitful action,” the court reasoned, “goes beyond the bargain struck by the Compensation Act.” Id.at 182.

Notably, the court upheld the dismissal of the workers’ claims that DuPont committed an intentional wrong by knowingly exposing its workers to asbestos. Id.at 181–182. In doing so, the court clarified that the “substantial certainty” standard requires more than “the mere knowledge and appreciation of risk.” Id. at 177 (citations omitted). The court further clarified the “substantial certainty test” in Laidlow v. Hariton Mach. Co.There, the court found that the “intentional wrong” test was met where an employer had purposely disengaged a safety device to increase productivity and, despite several reports of “close-calls” of serious injuries, only reengaged the device when OSHA inspectors were present. Laidlow, 170 N.J. at 622.

Despite this high threshold, employees have continued to attempt to circumvent the exclusivity of workers’ compensation. See Marinelli v. Mitts & Merrill, 303 N.J. Super. 61, 71–73 (App. Div. 1997) (finding gross negligence or abysmal lack of concern for the safety of employees is insufficient to establish the statutory intentional wrong exception); Bustamante v. Tuliano, 248 N.J. Super. 492, 591 (App. Div. 1991) (finding no intentional wrong where one police officer shot another in the eye during a training session because the shooter merely had an intent to “sting” the victim), certif. denied, 126 N.J. 385 (1991); cf. Blackshear v. Syngenta Crop Protec., 2011 WL 5238801, at *4 (D.N.J. Oct. 31, 2011) (finding allegations that a defendant was aware of a risk; did not disclose this risk to employees; and did not supply certain safety equipment equated to a sufficient pleading that defendant committed an “intentional wrong”).

In a recent such attempt, the plaintiff in Manasquan Bank sought to recover for injuries she allegedly suffered from exposure to toxic mold while working at a bank. According to plaintiff, in February 2016, she informed the bank’s management that her doctors recommended that she cease working at her branch because she was suffering from certain medical symptoms including, but not limited to, seizures, sinus infections, diabetes, fibromyalgia and headaches. She further alleged that within eight days of receiving said notice, her employer engaged the services of a mold inspection company to perform testing and undertook remedial measures, including eventually closing the branch.

The trial court dismissed plaintiff’s claims against the bank, with prejudice, for failure to state a claim, because the facts, as pled, did not demonstrate that the employer had committed an intentional wrong pursuant to the Act. To the contrary, the trial judge found that, while the employer knew about the mold as early as 2006, there was no link between the mold and plaintiff’s health issues until February 2016. Furthermore, after plaintiff’s meeting with management, the employer acted promptly to inspect and remediate the problem. The trial court concluded that these actions “[did] not appear to be the actions of an employer acting with substantial certainty that their employees will be injured or die.”

In upholding the trial court’s dismissal of the lawsuit, the Appellate Division found, among other things, that even under the liberal standard required when considering a motion to dismiss, plaintiff asserted “no facts to demonstrate [the Manasquan Bank] deliberately deceived others regarding the condition of the workplace or employee illness … or ignored prior injuries, accidents, or employee complaints regarding a dangerous condition that was not a part of ordinary industrial employment.”

Lessons from ‘Manasquan Bank’

The Manasquan Bank decision is valuable to practitioners for two important reasons. First, this case addresses how mold-related injuries will be evaluated in the context of the intentional harm exception to the New Jersey Workers’ Compensation Act. The decision revealed that, in the context of the intentional harm exception, New Jersey courts will treat mold exposure similar to asbestos exposure. That is, to overcome the high threshold a plaintiff must demonstrate more than mere knowing exposure to the hazardous substance. Second, the decision shows that workplace injury cases brought in the Law Division should be dismissed with prejudice, at the pleadings and pre-discovery stage, if the plaintiff fails to assert sufficient facts to demonstrate that the employer’s conduct constituted an “intentional wrong.” See Welch v. Schneider Nat. Bulk Carriers, 676 F. Supp. 571 (D.N.J. 1987); see also Sims v. VC999 Packaging Sys., 2018 WL 533911 (D.N.J. Jan. 24, 2018) (dismissing complaint without prejudice); Shorter v. Quality Carrier, 2014 WL 7177330 (D.N.J. Dec. 16, 2014) (dismissing complaint without prejudice). In light of the foregoing, this decision demonstrates that it will remain extremely difficult for plaintiffs to overcome the exclusive remedy bar provided by the Act.

As a result of the Manasquan Bank decision, employers defending against intentional wrong claims should carefully analyze the complaint to determine whether the plaintiff has pled sufficient facts to overcome the exclusivity bar prior to engaging in costly discovery, thereby preserving valuable time and resources.

Reprinted with permission from the November 7, 2019 issue of the New Jersey Law Journal. (c) 2019 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.